April 2006
A Publication of Concentrated Knowledge™ for the Busy Executive • www.summary.com
Things Aren’t Quite What They Seem
How to Think and Explore the World Like a Renegade Economist
by Chris Lauer
crack cocaine have in common with nylon stockings?
They explain that both things made a previously
expensive product available to the masses. How
much do parents really matter? The authors conclude
that parents matter a great deal in some ways, and not
at all in others, and provide the specific details and
studies that help us understand many of those ways.
The authors explain that
Freakonomics is based on the following
five fundamentals:
1. Incentives form the cornerstone of
modern life.
2. Conventional wisdom is usually
faulty.
3. Dramatic effects can often be
traced to distant, subtle causes.
4. The people who call themselves
experts use the advantage of their
information to serve their own personal interests.
Discovering the Details
5. We can reduce the complexity of
our world by understanding what
In Freakonomics, renowned economist
FREAKONOMICS
we should measure and how we can
by Steven D. Levitt
Steven D. Levitt and journalist Stephen J.
measure it.
and
Stephen
J.
Dubner
Dubner ask many valid questions about
Freakonomics
has become a runaway
the world around us, and go about “stripPublished by
bestseller
due
to
many factors. On a
ping a layer or two from the surface of
William Morrow.
Freakonomics is the
superficial
level,
Copyright © 2005,
modern life and seeing what is happening
242
pages,
$25.95.
most compelling name a book on ecounderneath.” As an economist who finds
nomics has ever had. The word freak
great pleasure in discovering the details
added to the word economics is a clever play on
that have been missed by others, Levitt seeks out the
words — an enticing moniker that is both fun to
answers found in the data, as well as the patterns in
repeat and instantly recognizable as a concept worthy
that data, which can only be revealed when the propof closer inspection. To further the intrigue, the book
er questions are asked (outside of the realm of moral
also bears an appealing graphic of an apple that upon
posturing and conventional wisdom).
deeper inspection reveals the pulpy interior of an
For example, why did the average price paid for
orange under its green, shiny skin — a perfect image
term life insurance fall dramatically in the late
to represent the secret worlds lurking beneath the
1990s? The authors point out that the Internet
book’s surface. This one-two combo punch of title
allowed customers to instantaneously find the cheapand graphic makes it the best-looking business tome
est policy, saving them $1 billion per year. What did
E
xploring the interconnected nature of reality
through hard data might offer many surprises, but real stories about real people give us
solid points to ponder about ourselves. Combining
these two methods of observation — data and stories — into a single view of our lives answers
numerous questions while providing us with a better
perspective on our world and helping
us understand what we see when we
open our eyes a little wider.
Freakonomics helps us unearth the subtle facts that converge to create larger
concepts, events and phenomena in our
lives, as well as the personal stories that
create them. It also shows us how we
can use the tools of the economist, such
as “regression analysis” and the
LexisNexis database, to shape these
elements into a more coherent perspective on the society in which we live.
“Moving up to
the next level of
storytelling and
comprehension,
the book
expands the
nitty-gritty
details that help
us comprehend
more than the
story of an
economist on
the cutting
edge: We get
facts and
concepts that
can help us live
our lives,
as well as
understand
more about the
systems
surrounding
us.”
to hit the bookstores in years, perhaps
ever. The bright orange spine and title
also scream out for additional attention.
A Simple Guideline
But the inside of Freakonomics
is what keeps the book at or
near the top of many bestseller
lists. Although it offers none of
the usual seven strategies, five
steps, six ways, and 10 things that
often grace the pages of the usual
business book, it does provide a simple
guideline that blazes a trail through its
contents. This unifying element unleashes its intent, and guides readers into its
conclusions that are strong enough to
invite reflection long after the book has
been shelved. That guideline is made up
of short excerpts from a magazine article that was written long before
Freakonomics was a book.
Initially, journalist Stephen J. Dubner,
wrote an extensive piece about the brilliant young economist Steven D. Levitt
in the Aug. 3, 2003, edition of The New
York Times Magazine. Dubner detailed
the controversies surrounding Levitt’s
work as an economist who is willing to
put himself on the front lines of political debate. At the time, Levitt and a colleague were turning heads by questioning the connection between the Roe v.
Wade abortion decision and the recent
decline in the nation’s crime rate.
Dubner also painted a personal profile
of the economist that colored him as a
lovable, absent-minded professor whose
nerdy style, youth, and unique take on
the world of economics set him apart
from his contemporaries.
Conventional Wisdom Meets
Statistical Analysis
Each chapter in Freakonomics begins
with a snippet from that fateful piece in
The New York Times Magazine. These
excerpts provide a starting point from
which the stories within the book take
shape. Not only do we see the glossy
prose of a masterful journalist turn the
obsessions of a young economist into
subject matter that is relevant to the average person, but we also get the deeper
2 Soundview Featured Book Review™
inside scoop that was left out of the original article due to space restrictions.
Moving up to the next level of storytelling and comprehension, the
book expands the nitty-gritty
details that help us comprehend more than the story of
an economist on the cutting
edge: We get facts and
concepts that can
help us live our
lives, as well as
understand more
about the systems
surrounding us.
These details are not
just trivia for entertainment’s sake.
Thanks to Levitt’s masterful ability to
crunch the numbers past conventional
wisdom down to a foundation of statistical facts, we learn that swimming pools
are far more dangerous to children than
the guns in their homes, that the management infrastructure of some crackdealing gangs often resembles that of
McDonald’s, and that an honor system
for buying bagels works at least 87 percent of the time.
Controversy
Many of the points made in
Freakonomics are controversial. These
include claims that many sumo wrestlers
cheat, the elderly and Hispanics are consistently discriminated against on The
Weakest Link game show, and commissions motivate real-estate agents to sell
homes at lower, not higher, prices. But
Levitt’s controversial conclusion that
legalized abortion has had a dramatic
effect on reducing crime in the United
States (and elsewhere) made national
headlines when former Secretary of
Education Bill Bennett said on his Sept.
28, 2005, “Morning in America” radio
show: “It’s true that if you wanted to
reduce crime … you could abort every
black baby in this country, and your
crime rate would go down.” The comments ignited a media firestorm of condemnation and defense. Bennett
explained that he was simply extrapolating an idea that was written in
Freakonomics.
But on the authors’ Web log two days
later, Levitt took issue with Bennett’s
twist on his work. Levitt writes that he
and John Donohue, the co-writer on their
academic paper that brought to light the
abortion-crime connection, did not focus
on race in their work. Levitt writes, “I
mean it when I say that, from a purely
fact-based and statistical perspective,
race is not in any way central to our
arguments about abortion and crime.”
Freakonomics is a book that offers
more than advice and tips: It provides
deeper understanding of many professions and fundamental concepts by challenging faulty conventional wisdom at
every turn. The people who can benefit
from its statistical analysis include parents who may be doing too little or too
much for their children, social activists
looking for an edge, anyone interested in
education reform, schoolteachers who
want to learn how their cheating colleagues get caught, and fans of inner-city
crime dramas who want to learn how
real gangsters make their money.
Freakonomics offers all readers the hidden facts buried within the stories they
live and see dramatized every day, along
with the numbers and statistics that can
help them draw sense from the chaos.
Klansmen and
Real-Estate Agents
For inquisitive people in the habit of
asking random questions, Levitt is a
mentor. He has asked some of the most
outlandish questions ever conceived and
found illumination in their answers. For
example, when Levitt poses the question,
“How is the Ku Klux Klan like a group
of real-estate agents?” he isn’t just
throwing two concepts together to see
how they clash. He is actually drawing
the reader deep into the economist’s
world of hidden incentives and the
power of exclusive information. By deciphering the codes used by both Ku Klux
Klansmen and real-estate agents, the
authors demonstrate how the right information in the right minds can both
enlighten and empower.
At the onset of World War II, antibigotry activist Stetson Kennedy
decoded the language of the Ku Klux
Klan and helped to get its code words
inserted into the Adventures of
Superman radio show. This converted
the Klan’s private communications into
ammunition for mockery. By portraying Klansmen as Superman’s foes who
used a silly coded language to communicate with each other, Kennedy
demystified the Klan’s real secret code
when it was broadcast to millions of
listeners nationwide. The authors
explain that removing the Klan’s informational advantage reduced its ability
to gather new members, deflating its
power. Similarly, the authors offer
readers the code words that real-estate
agents use to sell their own homes,
uncovering and sharing the information
asymmetry they use to their own
advantage.
Perfect Parents
In a compelling chapter called, “What
Makes a Perfect Parent?” the authors
delve into the connections between a
child’s personal circumstances and his
or her performance at school, as well as
our perceptions of those connections.
Breaking down the data from a study
undertaken by the U.S. Department of
Education called the Early Childhood
Longitudinal Study (ECLS), which
measured the academic progress of
more than 20,000 grammar-school children from across the country,
Levitt uses the economist’s
tools to find out more about
the art of parenting.
Levitt found eight factors
that showed a strong correlation with the students’
test scores, and eight factors that had no correlation.
The factors that did affect test
scores were no surprise,
including the fact that the
child has highly educated parents, the child’s parents have
high socioeconomic status,
the child has many books at
home, and the child’s parents
are involved in the PTA. But
the eight factors that had no
correlation to the children’s test scores
were the biggest surprises of all.
According to Levitt’s analysis of the
“Freakonomics
offers all
readers the
hidden facts
buried
within the
stories they live
and see
dramatized
every day,
along with
the numbers
and
statistics
that can help
them draw
sense from
the chaos.”
Soundview Featured Book Review™ 3
ECLS data, the fact that a child’s family is intact had
no correlation with his or her test scores. It also did
not matter that the child’s parents recently moved to a
better neighborhood, nor did it matter if the child’s
mother did not work between the child’s birth and
kindergarten. Even more surprising, Levitt found that
regularly taking your child to museums and reading
to him or her nearly every day also had no effect on
test scores. Likewise, frequently watching television
had no negative effect on the child’s test scores. What
can parents learn from Levitt’s insights? Basically,
the conventional wisdom about the detrimental
results of watching television is wrong. And, despite
the best of intentions, the cultural cramming performed by doting parents will not bring up their
child’s test scores. Levitt explains that parents who
are successful, well-educated and healthy usually
have children who test well in school, but most childrearing techniques are highly overrated.
The Heart of the Matter
Although Freakonomics has no traditional narrative running from beginning to end, it leaves readers
with the overall feeling that they have stumbled on a
treasure-trove of many concepts and facts that were
once beyond their grasp. By justifying the use of
strange questions to get at the heart of the matter,
the authors expand their readers’ minds by showing
them how economists turn collections of facts into
unusual theories, and then prove them by subjecting
them to critical analysis. The authors admit that
their book has no “unifying theme,” but it does have
a unifying element: the thought patterns of its economist protagonist, Steven Levitt. With Stephen
Dubner’s empathetic portrayal of Levitt’s personal
quirks (unfashionable eyewear, unkempt hair, etc.)
and personal tragedy (the sudden loss of a young
son), we can easily put ourselves in his shoes as a
human, and just as easily find ourselves in his
inquisitive, truth-seeking head. ■
Chris Lauer is senior editor for Soundview.
He can be reached at [email protected].
The co-author: Steven D. Levitt teaches economics at the
University of Chicago. He recently received the John Bates
Clark Medal, awarded every two years to the best American
economist under the age of 40.
Inside the Bestsellers:
What Makes Freakonomics So Special?
Ever since its release on May 1, 2005,
Freakonomics has been making waves on the
nonfiction hardcover bestseller lists of the
New York Times, Amazon, Publisher’s Weekly,
BusinessWeek, and many other media outlets.
Although great books weave in and out of our
perceptions on a daily basis, the unique books
that make it to the bestseller charts are a privileged few.
About 200,000 books were published in
2005. Of those books, only a tiny percentage
(about 0.2 percent) made it to the bestseller
lists. According to Daisy Maryles from
Publisher’s Weekly, only 442 new adult trade
titles made it onto PW’s four weekly lists last
year. In addition, she explains, 45 percent of
those stayed on a list for less than one month.
Statistics such as these demonstrate the
relevance of Freakonomics’ success. Maryles
points out that the combined stays of Malcolm
Gladwell’s Blink, Thomas L. Friedman’s The
World Is Flat, and Freakonomics on the 2005
charts took up almost 15 percent of the available weekly nonfiction hardcover positions on
the bestseller charts: a distinguished reign
indeed.
Freakonomics spent 35 weeks on
Publisher’s Weekly’s hardcover nonfiction
bestseller list, the fifth most popular book of
the year on that list, topped only by two books
that had a head start by being released before
2005. The only other 2005 books that stayed
on the hardcover nonfiction bestseller list for a
longer period of time are Blink and The World
Is Flat, which were both published before
Freakonomics.
The co-author: Stephen J. Dubner lives in New York City.
He writes for the New York Times and The New Yorker, and
is the national bestselling author of Turbulent Souls and
Confessions of a Hero-Worshiper.
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